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US county prepares for property boom

Property Here - Thursday, March 14, 2013

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By Nikki De Guzman:

New London County located in the southeastern corner of the US state of Conneticut is set to become one of the country's best performing housing markets over the next five years, with home values expected to rise by an average of 7.1 percent per year.    

According to the latest home price report by Fiserv Case-Shiller, that is more than twice the 3.3 percent annual increase forecasted for the country in the same period. 

David Stiff, Chief Economist at Case-Shiller, noted that the expected increase is due to housing values being way below what people in the area can afford. The average New London County homeowner spends only 12 percent of his income on mortgage payment — “significantly” lower than those in other areas of the US.

“The basic answer is that housing is so cheap there,” said Stiff.

The report noted that home values in the county fell 23.4 percent since its high in 2006. But Stiff said while it is the largest percentage drop in Connecticut, it also means there is plenty of value to recover.

He added that projections show that values will likely remain flat for another year before moving upwards. 

For 2015 and 2016, Case-Shiller expects values in the area to increase by more than 10 percent annually.

Stiff said while foreclosures remain high, they account for a smaller portion of the area’s overall housing market. Only 10 percent of homes offered for sale are bank-owned, he noted, which is well below the country’s average of 20 percent. 

With lower-priced homes out of the market, values in the area are expected to grow, he said.

 

Nikki De Guzman, Junior Reporter at PropertyGuru, wrote this story. To contact her about this or other stories email nikki@allproperty.com.sg